Fundamentals Effecting the Markets Today
Chinese Premier Wen Jiabao will host the summit on February 14 in Beijing with European Council President Herman Van Rompuy and European Commission President Jose Manuel Barroso.
Ahead of the meeting, a Chinese foreign ministry spokesman told the BBC that Europe’s “debt issue is at a critical juncture.”
Late Monday, Moody’s Investors Service cut its ratings on six European countries including Italy, Portugal and Spain, and lowered the outlook on the United Kingdom, Austria and France. Spain bore the brunt of the ratings agency’s moves, suffering a two-notch downgrade, as Moody’s said it was skeptical the government would be able to reach its deficit target.
S&P downgraded 15 Spanish banks in total, and cut its Banking Industry Country Risk Assessment on Spain to group ‘5? from ‘4?. Fitch also downgraded the banks.
The European Union may punish Spain’s government, led by Prime Minister Mariano Rajoy, by May for holding off on austerity measures ahead of a regional election in March, Reuters reported Tuesday, citing a source familar with the situation. The report also cited three senior European Union officials, who said the European Commission thinks Spain overstated 2011 deficit figures to make this year’s deficit look better, and that it’s also moving too slow in addressing a deterioration in public finances that is expected this year.
The decision by Moody’s Investors Service to put Britain’s triple-A credit rating on negative outlook is a “reality check” for the country’s political leaders, British Chancellor of the Exchequer George Osborne told the BBC on Tuesday.
German investor sentiment rose more sharply than expected in February to post its first positive reading since May, the Mannheim-based Center for European Economic Research, or ZEW, reported Tuesday. The ZEW expectations index rose to 5.4 from minus 21.6 in January. Economists had forecast a February reading of minus 11.6. Meanwhile, economic sentiment in the euro zone rose in February to minus 8.1 from minus 32.5 in January. Economists had expected euro zone economic sentiment to improve by 11.4 points to minus 21.1.
European Union officials and leaders of the euro-zone’s central bank still haven’t hammered out key details of a bailout of Greece, two days before an important meeting to approve the next round of bailout funds for Greece. Though the Greek Parliament has unveiled a new austerity plan that calls for severe cuts in spending, pensions and wages, several things must still be determined, the article said
The US Commerce Department said retailers’ sales rose a seasonally adjusted 0.4% in January, short of forecasts for a 1% increase, mostly because of weakness in automobile sales. The report threw some cold water on the fragile economy whose recovery had finally started to gain pace, particularly as reflected in growth of the nation’s labor market and gave investors a reason to take some profits.
In Japan the BoJ made a surprising announcement of additonal monetary easing. The Bank of Japan said it will expand its asset-purchase program again by ?10 trillion ($130 billion) and changed the wording of its price target following political pressure to strengthen its commitment to ending deflation. The BoJ central policy board said it will boost the size of its asset-purchase program, including low-cost loans — the main tool for easing credit amid near-zero interest rates up to ?65 trillion from ?55 trillion.
Tuesday Economic Reports actual v. forecast
|
GBP |
RICS House Price Balance |
-16% |
-18% |
-16% |
|
AUD |
NAB Business Confidence |
4 |
3 |
|
|
JPY |
Interest Rate Decision |
0.10% |
0.10% |
0.10% |
|
JPY |
Industrial Production (MoM) |
3.8% |
4.0% |
4.0% |
|
JPY |
BoJ Press Conference |
|||
|
EUR |
French Non-Farm Payrolls (QoQ) |
-0.2% |
0.2% |
0.0% |
|
HUF |
Hungarian CPI (YoY) |
5.5% |
5.0% |
4.1% |
|
GBP |
Core CPI (YoY) |
2.6% |
2.7% |
3.0% |
|
GBP |
CPI (YoY) |
3.6% |
3.6% |
4.2% |
|
EUR |
German ZEW Economic Sentiment |
5.4 |
-11.6 |
-21.6 |
|
EUR |
Industrial Production (MoM) |
-1.1% |
-1.2% |
0.0% |
|
EUR |
ZEW Economic Sentiment |
-8.1 |
-21.1 |
-32.5 |
|
GBP |
BOE Inflation Letter |
|||
|
BRL |
Brazilian Retail Sales (YoY) |
6.7% |
7.6% |
6.7% |
|
USD |
Core Retail Sales (MoM) |
0.7% |
0.6% |
-0.5% |
|
USD |
Import Price Index (MoM) |
0.3% |
0.3% |
-0.1% |
|
USD |
Retail Sales (MoM) |
0.4% |
0.8% |
0.0% |
Originally posted here
